The Second Home Market: Vacation Homes and Investment Properties

Following are interesting real estate statistics involving the second home market comprised of vacation homes and investment properties:

Second Homes

• Most recent studies by The National Association of Realtors report that 28% of all homes purchased in 2005 were for investment, while another 12% were vacation homes.
• Second home buyers are middle-aged, middle income households, typically 45- to 55-years old (the baby boom generation).
• In searching for a second home, 83% of buyers used real estate agents.
• The typical buyer searched seven weeks to find their second home and looked at six properties.
• 83% financed with a mortgage and made a median down payment of 22% (45% used their savings for a down payment and 29% used equity from a previous home).
• Most vacation homes are in rural or recreational areas, while investments homes are located primarily within metropolitan areas.
• Nearly one out of five second homes will become primary residences after retirement.
• 92% of all second home buyers see their property as a good investment.
• 38% of second home owners said it was very likely they would purchase another home within two years.

Vacation Homes

• There are approximately 6.6 million vacation homes.
• The typical vacation home buyer is 55-years-old and earns approximately $75,000.
• Vacation home buyers are motivated by lifestyle considerations and have very little interest in renting (86% of vacation home buyers do not rent their property).
• Vacation home owners prefer to be close to where they spend recreational time or close to natural attractions: 37% of recent buyers enjoy beach, lake or water sports; 29% are interested in golf; 18% theme parks; 16% winter recreation; 12% hunting or fishing; and 9% boating.
• Vacation homes are located relatively close to the owner’s primary residence, with a median distance of just under 200 miles.
• The typical vacation home is a single-family detached home, with a median size of 1,290 square feet.
• 50% of buyers said their vacation home was smaller than their primary residence, 13% said about the same and 37% reported it was larger.
• 27% of vacation homes will become the primary residence after retirement.
• 16% of vacation home buyers said it was likely they would purchase another home within two years.

Investment Properties

• There are over 37 million investment units.
• The typical vacation home buyer is 47-years-old and earns approximately $85,000.
• The typical investment home owner prefers to be closer to their property, with a median distance from the primary residence of 15 miles.
• Investment buyers most frequently purchase with rental income in mind, with a secondary goal of diversifying portfolio assets.
• Almost 80% of investment home owners rent their properties.
• Only 10% of investment buyers intend to use their second property for recreational purposes.
• The typical investment property is a single-family home (79%), with a median size of 1,700 square feet.
• 62% of recently purchased investment homes were smaller than the owner’s primary residence.
• 14% of investment property will become the primary residence after retirement.
• 47% of investment buyers said it was very likely they would purchase another home within two years.

NOTE: Information compiled from a variety of proprietary and published sources, such as National Association of Realtors. This information is accurate as of September of 2006.